Re Luciano Uratoriu Ex Parte: MS Mcleod Limited [1989] FCA 219 (15 June 1989)

FEDERAL COURT OF AUSTRALIA

Re: LUCIANO URATORIU
Ex Parte: M.S. McLEOD LIMITED
No. P562 of 1987
FED No. 324
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA
Lee J.(1)

CATCHWORDS

Bankruptcy - lapse of petition - power of Court to extend life of petition - whether power limited to a single extension - whether Court may vary or extend an extension order made within twelve months of presentation of petition - nature of power to extend life of petition.

Bankruptcy Act 1966, sub-s.14(5), s.30, sub-ss.31A(1), 31A(6), 31A(7), para.33(1)(c), s.37, sub-ss.41(6A), 41(6B), 52(4), 52(5)

Bankruptcy (Amendment) Act 1980

Statute Law (Miscellaneous Provisions) Act (No. 2) 1986

Bankruptcy Rules, sub-rr.119A(3) and 135(2)

Bristow Helicopters Ltd. v. Global Marine Drilling Co. (1981) WAR 108

Esso Research and Engineering Co. v. Commissioner of Patents [1960] HCA 31; (1960) 102 CLR 347

Evans v. Bartlam (1937) AC 473

Re Hibbard; Ex parte Playroom Pty. Ltd., Unreported (Federal Court of Australia, Pincus J., 5 December 1988)

Streimer v. Tamas (1981) 37 ALR 211

Re Young; Ex parte Smith (1985) 5 FCR 204

HEARING

PERTH
15:6:1989

Counsel for the Creditor: Mr W.L. Goodlet

Solicitors for the Creditor: Unmack & Unmack

Counsel for the Debtor: Mr D.M. Bruns

Solicitors for the Debtor: Birman & Ride

ORDER

The application for a declaration, or alternatively an extension of time to seek review of the Registrar's orders, be dismissed.

Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

DECISION

This is an application by the debtor seeking a declaration pursuant to s.30 of the Bankruptcy Act 1966 ("the Act") that the creditor's petition in this matter lapsed on 6 January 1989. Alternatively, the debtor seeks an extension of time pursuant to sub-r.119A(3) of the Bankruptcy Rules to apply to the Court pursuant to sub-s.31A(6) of the Act for a review of the Registrar's exercise of power pursuant to para.31A(1)(m) of the Act by which the Registrar extended the period at the expiration of which the petition would lapse under sub-s.52(5) of the Act.

2. The petition in this matter was presented and filed by a creditor on 28 July 1987. On 17 May 1988 an order was made that M.S. McLeod Limited be substituted as the petitioning creditor. Consequential orders were also made granting the substituted petitioning creditor leave to amend the petition and to file an affidavit verifying the amended petition.

3. On 19 July 1988 the Deputy Registrar made an order dispensing with personal service of the amended petition and providing instead for a means of substituted service of the amended petition. In addition, the Deputy Registrar made an order pursuant to sub-s.52(5) of the Act extending until 6 January 1989 the period at the expiration of which the amended petition would lapse. Pursuant to sub-s.52(4) of the Act, the amended petition would have lapsed on 29 July 1988 unless an order extending that period had been made under sub-s.52(5) prior to that date.

4. On 28 November 1988 by consent, both creditor and debtor being represented by counsel, the Registrar made a further order extending that period to 6 February 1989. On 6 February 1989 the Registrar made a further order as follows:
"The time limited for the expiration of the

petition be extended to 30 March 1989 or until
further order."

5. The hearing of the amended petition commenced before me on 21 February 1989. Pursuant to sub-r.135(2) counsel for the debtor sought special leave to use in evidence an affidavit sworn by the debtor. The debtor had not attended for cross-examination on that affidavit after notice of requirement for his attendance for cross-examination had been duly delivered by the petitioning creditor. The hearing of the petition was adjourned until 15 March 1989 and on that day I refused leave for the debtor's affidavit to be used in support of the debtor's notice of opposition to the petition. An order was made adjourning further hearing of the petition until 2 June 1989 on condition that by 29 March 1989 the debtor pay into Court the debt due to the petitioning creditor of $1,539.45 and $750.00 on account of costs, a total sum of $2,289.45. I made a further order extending until 16 July 1989 the period at the expiration of which the petition would lapse.

6. On 25 April 1989 the debtor made application to the Court for a declaration that the petition had lapsed or the grant of an extension of time within which the debtor may lodge an application to review the decisions of the Registrar made on 28 November 1988 and 6 February 1989 to extend the life of the petition.

7. Upon the hearing of the application counsel for the debtor did not seek to review on their merits the exercise of the Registrar's discretion on 28 November 1988 and 6 February 1989. Counsel supported the application for review by reference to the same grounds relied upon to support the declaration sought in the application. Counsel contended that pursuant to sub-s.52(5) the power of the Court or the Registrar was limited to fixing a single period exceeding twelve months but not exceeding twenty-four months from the date of presentation of the petition at the expiration of which the petition would lapse. It was submitted that no further order could be made in respect of that period after the expiration of twelve months from the date of presentation of the petition.

8. Sub-section 52(4) was substituted and sub-s.52(5) inserted by the Bankruptcy (Amendment) Act 1980.

9. Sub-sections 52(4) and (5) are as follows:

"52(4) A creditor's petition lapses at the
expiration of -
(a) subject to paragraph (b), the period
of 12 months commencing on the date of
presentation of the petition; or
(b) if the Court makes an order under
sub-section (5) in relation to the
petition - the period fixed by the
order,
unless, before the expiration of whichever
of those periods is applicable, a
sequestration order is made on the petition
or the petition is dismissed or withdrawn.
52(5) The Court may, at any time before the
expiration of the period of 12 months
commencing on the date of presentation of a
creditor's petition, if it considers it
just and equitable to do so, upon such
terms and conditions as it thinks fit,
order that the period at the expiration of
which the petition will lapse be such
period, being a period exceeding 12 months
and not exceeding 24 months, commencing on
the date of presentation of the petition as
is specified in the order."

10. Section 31A was inserted by the Statute Law (Miscellaneous Provisions) Act (No. 2) 1986.

11. Paragraph 31A(1)(m) reads as follows:

"Subject to sub-section (2), the following powers
of the Court under this Act may, if a Judge of the
Court, in writing, directs, be exercised by a
Registrar of the Court in relation to a
proceeding:...
(m) the power under sub-section 52(5) to extend
the period at the expiration of which a
creditor's petition will lapse;"

12. Counsel for the debtor did not contest that pursuant to para.31A(1)(m) the Registrar had been duly directed by a Judge of the Court to exercise the Court's powers under sub-s.52(5).

13. The totality of the provisions of the Act and the network of Court powers into which the further power contained in sub-s.52(5) was inserted, provide the context in which the meaning of sub-s.52(5) is to be ascertained.

14. In Re Young; Ex parte Smith (1985) 5 FCR 204, a Full Court of the Federal Court referred to the mischief to which sub-s.52(4) in its original form had been directed, namely the uncertainty of the period of life of a petition. Sub-section 52(4) provided for a petition to lapse after the expiration of twelve months. The substitution of sub-s.52(4) and the insertion of sub-s.52(5) by the Bankruptcy (Amendment) Act (1980) permitted the life of a petition to be extended beyond twelve months to a period not exceeding twenty-four months upon cause being shown. (See also Re Hibbard; Ex parte Playroom Pty. Ltd., Unreported (Federal Court of Australia, Pincus J., 5 December 1988).)

15. After the amendments to the Act effected in 1980 a petition lapsed after twelve months from the date of presentation, such date of lapse being fixed by statute, but the Court was permitted to fix a later date provided that the Court made the order extending the life of the petition before the petition lapsed by force of sub-s.52(4). (See Re Young at p 207.)

16. The order the Court may make pursuant to sub-s.52(5) is upon such terms and conditions as the Court thinks fit. The reference to terms and conditions suggests that the need for further or other orders at a later date may have been in the contemplation of the Parliament. In any event, the Court's power under sub-s.52(5) was not limited to the simple and single task of fixing a finite period for the life of the petition by selecting a date between twelve and twenty-four months from the date of presentation of the petition.

17. By enabling the period of the life of the petition to be fixed by order of the Court, sub-s.52(5) attracted the power of the Court to review or vary such an order or make further orders in respect of that order. It would not be a sensible reading of sub-s.52(5) to limit the Court's power to vary an order of its own making, or to make further orders in respect of it, to such variations or further orders as may be made prior to the expiration of twelve months from the date of presentation of the petition.

18. The words used in para.31A(1)(m) acknowledge that the power to be exercised under sub-s.52(5) is a power to extend the period of the life of a petition rather than a power to fix a defined and distinct period for the life of the petition. (See Streimer v. Tamas (1981) 37 ALR 211 per Deane and Ellicott JJ. at p 215.) Where the power granted is a power to extend time, there is an implication that the power continues to be exercisable whilst the period remains current. (See Esso Research and Engineering Co. v. Commissioner of Patents [1960] HCA 31; (1960) 102 CLR 347 at p 351.)

19. Once the Court has made an order extending the life of the petition, the Court becomes seised of the control of the expiration of the petition subject to the statutory limitation in sub-s.52(5) that the life of the petition not be extended beyond twenty-four months from the date of its presentation. Pursuant to s.30 of the Act, the Court may make such orders as it considers necessary for the purpose of giving effect to the Act. Therefore, in exercising its power to extend the petition, the Court may tailor the scope of the order to meet the requirements of sub-s.52(5) and the requirements of the Act generally. Similarly, pursuant to s.37 of the Act, the Court's power to rescind, vary or discharge an order or suspend the operation of an order apply to any order made by the Court under sub-s.52(5). It must have been within the contemplation of Parliament that the Court's powers under s.37 of the Act could be exercised after a period of twelve months had expired from the date of presentation of the petition if the petition were still on foot by virtue of the order sought to be reviewed, rescinded, discharged or suspended. In Re Young the petition had lapsed. The question stated for the Court's opinion in that case was whether the petition could be revived by use of the Court's powers under para.33(1)(c) of the Act. The Full Court held that para.33(1)(c) was of no assistance and, furthermore, made it clear that once the petition had lapsed there was no power in the Act to revive it.

20. In the present case the petition was on foot when an order was made extending the life of the petition. Thereupon the statutory period of twelve months set out in sub-s.52(4) no longer applied and the order of the Court became the means by which the period of life of the petition was determined.

21. The order extending the petition was made on behalf of the Court by the Registrar or his Deputy pursuant to the delegated power conferred by para.31A(1)(m) of the Act. Sub-section 31A(6) provided for the Registrar's exercise of power to be reviewed by the Court (see also sub-s.14(5)). There is no indication in the Act of any limitation upon the power of review to be exercised by the Court. Being a review of an exercise of delegated power it would be appropriate to conclude that the review would be a rehearing de novo (see Evans v. Bartlam (1937) AC 473 at p 478; Bristow Helicopters Ltd. v. Global Marine Drilling Co. (1981) WAR 108.) That view of the matter is confirmed by sub-s.31A(7) which permits the Court to make such order as it thinks fit with respect to the matter in respect of which the Registrar's power was exercised, the Court being enabled to review that exercise by its own motion.

22. With respect to sub-s.52(5) such a review of a Registrar's exercise of power may entail the setting aside of the Registrar's decision and the making of a fresh order by the Court and may involve such an order being made after more than twelve months had elapsed from the date of presentation of the petition. The root of the Court's power to make such an order under sub-ss.52(5) and 31A(6) would be found in the Registrar's initial exercise of that power within the time required by sub-s.52(5).

23. Although in contrast to the powers vested in the Court by s.37 s.31A does not vest any power in the Registrar to rescind or vary any order the Registrar may have made, it is not necessary to look to such a power to vary an order to ground any further extension of the life of the petition after an order extending the life of the petition has been made in the manner provided for in sub-s.52(5). There is a necessary implication that both the Court and the Registrar have the power to further extend the period fixed in the original order provided that such further extension is effected whilst the petition remains on foot. That implied power will not be lost by any failure to make the initial order subject to an appropriate condition in that regard or subject to further order.

24. The application of such a construction of sub-s.52(5) does no violence to the requirement for certainty described in Re Young. The outer limit of life of the petition remains fixed by the Act at twenty-four months from the date of presentation. A creditor may determine whether the petition lapsed within that time by searching the Registry file. If the life of the petition has been extended by order of the Court, a creditor would be on notice that the order may be continued by further order (see Streimer v. Tamas at p 215) or the period may be extended by variation or review of the existing order.

25. The situation is not unlike that which applies to the extension of time for compliance with a bankruptcy notice by the exercise of powers provided in sub-ss.41(6A) and (6B) of the Act. As a matter of commonsense and necessity, the Court or the Registrar may be required to make successive orders further extending the time for compliance with a bankruptcy notice. (See Streimer v. Tamas; and Re Ballato; Ex Parte Pezzano, Unreported (Federal Court of Australia, Lee J., 23 December 1988).) There is no reason to read sub-s.52(5) as providing a more limited power.

26. In sub-ss.41(6A) and (6B) it is the application to set aside judgment or the application to set aside the bankruptcy notice within the time prescribed that agitates the Court's or Registrar's power to make orders extending the period for compliance with the bankruptcy notice and the power to make sequential extensions. In respect of sub-s.52(5) it is the initial order made by the Court or Registrar extending the life of the petition before the period of twelve months has elapsed that provides the foundation for the Court or Registrar to order the expansion of that extension.

27. The application for a declaration, or alternatively an extension of time to seek review of the Registrar's orders, will be dismissed.